Homes Sales for March Up, Inventory Down

A recent video released by the National Association of REALTORS features Lawrence Yun, Chief Economist for the NAR discussing the details of the real estate market across the country for March 2018. Yun speaks about the homes sales figures, inventory and new construction.

For the month of March 2018, the seasonally adjusted annualized rate was 5.6 million units, which is a 1.1% increase. Compared to March 2017, however, sales are down about 1.2%.

The national median home price for March 2018 was $250,400. This is an increase of 5.8% compared to March 2017. Home prices are growing at about twice the rate of wages across the United States, currently.

The reason prices continue to rise is the lack of inventory. At the end of March 2018, 1.67 million homes were available for sale. Compared to March 2017, this number is down 7.2%. The month-to-month inventory continues to get worse, as well.

While the inventory numbers for March are up compared to the winter months, this isn’t a good indicator of the health of the housing inventory. Numbers for inventory are always higher in March than they are throughout the winter months. A fair comparison can only be reached by looking at March 2018 compared to March 2018.

The month supply for inventory is currently 3.6 months to exhaust inventory. One year ago, the supply was 3.8 months. On a month supply basis, the inventory situation is getting worse.

The NAR looked at an estimation of new listings and how quickly they were being bought. Many new listings are being purchased rather fast, which could be a good sign.

It’s possible the real estate market could see an inflexion point sometime in the middle of the summer or by the fall. This means the market could start to see a bit higher inventory figures of homes for sale. However, the overall inventory is still low.

A good sign for the real estate market in the United States are the housing permit figures. While it’s not a huge gain, the housing permit levels rose 6% when comparing quarter 1 2018 to quarter 1 2017.

Regulatory relief may be coming for small sized banks, as well. These banks are very important because they provide construction loans for small home builders.

The tax reform has been something the NAR has kept a close eye on. Compared to a few months ago, the new tax reform isn’t as big of a concern for buyers and sellers. Month over month, it’s causing less and less concern.

Something many sellers are worried about are rising interest rates. The interest rates have caused a portion of the inventory problem as sellers are becoming hesitant to sell due to the higher rate they would have to take on with the new home they purchase.

Overall, the new listing figures show hope for rising inventory numbers later this year. Buyer interest remains strong and the figures for March 2018 are good.

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